Real Estate Regulatory Act (RERA) is an act established by the Indian Government for regulating and promoting the real estate sector to make sure that the sale of apartments, plots, or buildings happen efficiently or transparently. The Act has been put in place to protect the interest of consumers buying property in India. It The Parliament passed the Act in May 2016, and it came into effectin its entirety from 1st May 2017 across India. As of today, 14 states and union territories like Gujarat, Bihar, Uttar Pradesh, Madhya Pradesh, Odisha, Andhra Pradesh, and Maharashtra have updated their rules with RERA and other places will do so as well.
RERA is expected to bring relief to people who buy property in India as builders will be held accountable for the timely delivery of their projects, and it will protect buyers from fraudulent sellers. The developers would also stand to gain from consumers’ increased confidence in a regulated environment.
The developers must get all approvals from various government agencies before launching a project and disclose all the information on the website that the state RERA regulatory authority will have.
There will be a registration number for the real estate agents, provided by the regulator, which they must mention in every property sale. This will help to remove the possibility of misleading the buyer. The authority has powers to impose penalties and imprison agents who violate the law.
Implications of RERA and Authority on Builders, Agents, and Buyers
The implications of RERA are as follows:
- Each state to set up the Real Estate Regulatory Authority for regulating real estate development
- Provisions will be applicable to both residential and commercial properties
- Standardization of norms for protectingthe interests of buyers and developers
- Expected to achieve transparency and accountability in the real estate sector
- Aims to minimize extensive project delays and fraudulent selling
Benefits of RERA for Buyers
For buyers, the benefits of RERA will be the following:
- Builders mustinform every detail of the project on the website of the RERA authority and update these details regularly
- The buyer should pay only on the basis of carpet area (area within walls). The builder cannot charge buyers for the super built-up area (balcony, lift, stairs, and lobby)
- Timely completion of projects because 70% of the money the customer pays must be transferred to a separate bank account and can be used only for completing the construction of the project
- Any delay in completion of the project and the developer must pay an interest rate of 2% above SBI’s Marginal cost of leading rate to the buyer for the delayed period
- Any defect in the building will be the responsibility of the builder for a period of five years
- Any disputes with the buyer must be resolved within 120 days
Important Aspects of RERA
- RERA will be followed in all Indian states, and this regulation applies to both residential and commercial properties.
- The sale of the property will be based on carpet area and not on the super built-up area.
- Builders must deposit 70% of the funds collected from buyers in a separate bank account for the construction of the project
- Developers must disclose the project details (legal title deed, financial statements, and so on) on the website and update it every quarterabout the progress of construction
- Projects with a plot size of minimum 500 square meters or eight apartments must be registered with the RERA Authority
- Builders should submit the original approved plans for their project and any changes made to RERA
- Developers and buyers both must pay the same interest rate of 2% above SBI’s MCLR for any delay
- Three years’ imprisonment for developers and up to one year for agents and buyers for any violation of the law
- Any structural or workmanship defects in the building during the period of five years must be corrected within 30 days by the promoter without any extra charges. If this is not done, the buyer is entitled to receive compensation under RERA
- Developers cannot demand for more than 10% of the property cost as an advance payment booking amount before a registered sale agreement is signed
- Developers cannot advertise, sell, market, offer, or book any plot or apartment without registering their project with the authority
- The buyer can contact the developer in writing within one year of taking possession of any shortcomings in the project.
Investing in real estate in India is now a regulated matter, and chances of fraud and exploitation of buyers will decrease because of RERA. It is possible to live according to AddressofChoice under the sharp eye of the government authorities.